Amid the strong economic development of recent years, Chinese people are becoming more interested in buying treasury bonds, a new investment channel for most of them. The majority of would-be buyers are middle-aged and young people. Some prefer T-bonds as a way of investment as it is not a time-consuming project compared to share dealing.

Since bank deposit rates have becoming increasingly low as part of the national policy to stimulate domestic consumption, many depositors have used some of their savings to buy T-bonds. Ordinary salary earners choose to open current accounts in the bank in order to invest elsewhere.

T-bonds have gained in popularity because of their low risk and stable profit. Statistics reveal state T-bonds provide a return 27 percent higher than bank deposits over the same period. Other types of investment bear a greater risk than state T-bonds, including treasury bonds issued by good-credit enterprises.

Yet this also indicates that Chinese people still have fewer investment channels. So far, people only have engaged in foreign currency speculation, share trading, investment in stamps, and state T-bonds.

State treasury bonds are in short supply while many enterprises find it difficult to raise capital on the stock market. Domestic economists have long urged the utilization of idle social capital to inject vitality into enterprises with great potentials. Yet, efforts in this regard are still largely lacking and there is less public enthusiasm.

Eastern provinces have seen a distinctive drop in support for treasury bonds for local economic development because of a government shift in focus towards western regions. In 2001, the Chinese government plans to issue 50 billion yuan of special treasury bonds to be used mainly to support implementation of the strategy of large-scale development of the country's west. To maintain a strong investment momentum, eastern China has to compete harder for the idle funds now being channeled in large quantities elsewhere.

(china.org.cn 06/05/2001)